Home values are still low in Detroit, with the average home price hovering around 1995 levels, but at least they are heading in the right direction. In August, average home prices in Detroit rose 2.7 percent, making Detroit one of only two metro areas to gain in value that month[1]. Washington D.C. was the other. And although home prices in the area are still 27 percent below 2000 levels, some analysts are starting to see a light at the end of the tunnel for the beleaguered city. Kelly Sweeney, for example, a Coldwell Banker CEO, believes that Detroit could be headed toward a real recovery far ahead of the rest of the country simply because it started to slump so much sooner. The area is even gaining jobs this year, and opportunists like Dan Gilbert, who recent moved his Quicken Loans headquarters to the heart of the city, are finding the incredibly cheap office space (Gilbert paid $10/square foot) impossible to resist[2].
“I’m not saying our crisis is over,” says Sweeney, but “there is a level of confidence [in southeast Michigan] there hasn’t been in…years.” He adds that “people who can spend, are.” Other analysts, however, warn that the numbers have not yet been consistent enough long enough to start celebrating a recovery, and many critics of developments like Detroit’s downtown “TechTown,” which is a business sector intended to attract high-tech companies, argue that the “improvements” are just bringing new people into Detroit and not benefiting those who have been living there for years.
Do you think Detroit might be on the rebound? Would you buy there?
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[1] http://www.freep.com/article/20111026/BUSINESS04/110260368/Have-Detroit-home-prices-turned-tide-?odyssey=mod%7Cnewswell%7Ctext%7CFRONTPAGE%7Cs
[2] http://www.economist.com/node/21533407
If one looks into the demographics of Detroit, there is no reason to thing things are getting better or going to get better there. The only segment of the population growing is the Muslims, and they do not traditionally bring in very much money.
Every growth prediction for Detroit has been followed by a decrease in population, increase in crime and the few that moved in asking themselves what, “what was I thinking!”
Detroit has been a turkey for the last couple of decades and there is little on the horizon to show this is going to change anytime soon.